When the early days of the COVID-19 pandemic hit, Best Buy (NYSE:BBY) proved a big winner in the field as legions of people rushed to upgrade their home electronics. Whether it was a new computer or relevant components to smooth working from home, or new home theater equipment to take the place of the almost-certainly-closed theater, Best Buy proved to be one of the best sources around. Now it's turned in a winning quarter, and there's some concern over whether or not it can keep the streak alive.
A Winning Quarter (Until You Talk to the Analysts)
The numbers turned in at Best Buy might look like a win objectively, though not quite the win analysts had in mind. Earnings per share figures came in at $3.48, which was just ahead of the $3.45 per share estimate to come out of Refinitiv. Revenue turned in a slight miss, coming in at $16.94 billion against an expected $17.23 billion.
Best Buy's fourth quarter was a good one against its own standards, though; the net income for the fourth quarter came in at $816 million, which compares nicely against the $745 million seen in 2019's fourth quarter.
The company could even offer up some exciting numbers in sales growth, though again, not what the analysts were expecting. Same-store sales were up 12.6%, reports note, though analysts were looking for that number to come in around 14.7%. Online sales growth was also seen to slip, with growth for online sales up 89.3% in the fourth quarter. That compares anemically, however, against the 174% growth seen in the third quarter and the 242% seen in the second, when the pandemic kicked off in earnest.
Analysts Disappointed, But Still On Board
With all the analysts that seem to have been disappointed out there, it would be easy to think that Best Buy might have suffered in the overall ratings. Our latest research confirms that's not the case, though, as Best Buy is currently enjoying the most bullish conditions seen in almost three months.
Best Buy has held a consensus “buy” rating for the last six months. Six months ago, the company had six “hold” ratings and 15 “buy” to its credit. Three months ago, that increased to nine “hold” and 16 “buy.” The first “sell” rating showed up last month, shifting the ratio to one “sell”, nine “hold” and 13 “buy.” Finally, this month, the company is at one “sell”, seven “hold” and 15 “buy”, which is just slightly less bullish than the figures from three months ago.
The price target, meanwhile, has plateaued. Six months ago, it was at $101.55, and that jumped to $108 even three months ago. A month ago, it made a much smaller upward leap to $110.37, where it remains today. The ratings changes add to a bullish case overall; so far, only two analysts have weighed in so far this year: UBS Group, which upgraded Best Buy to a “buy”, and Bank of America, who reiterated its earlier-set “buy” rating.
Conditions Shifting, But Best Buy is Ready
Like a lot of other companies out there, Best Buy did land-office business with the pandemic as customers wanted to improve the homes they would spend a lot of time in for the next several months. Now, with the pandemic seemingly retracting based on case numbers and a growing presence for therapeutics and vaccines stepping in, Best Buy's primary impetus for gain in the last nine months may be on the decline as well.
However, Best Buy has some plans to address this. It's closing a few stores, which is never really good news but tends to help the larger corporate body stay afloat. It's also firing large quantities of workers, which, ditto. It's also set to start testing a new smaller-store format, a move which has been seen working previously with stores like Target (NYSE:TGT) and allows Best Buy to put more emphasis into e-commerce, which should help not only keep sales up but also allow Best Buy to reduce some expenses; big box stores need to be heated, cooled and well-lit, which tends to drive up power and water costs.
Will these points work? There's no way to tell after the fact. But the fact that Best Buy is putting so many potential options to work makes it a solid steward of your investment dollars. Putting some cash down on Best Buy to hold its position and produce future gains—though maybe not as extensive as the ones seen recently—should be worth doing.
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